European Six call for carbon pricing: A sustainable reputation?
- Increased transparency of how oil and gas companies influence the climate change debate could help build a more positive public image
The announcement by six of Europe’s largest oil and gas companies at the beginning of June, encouraging the UN to embrace “a widespread and effective” carbon pricing system, drew positive comment across the media spectrum. But what are the reputational opportunities and who are the reputational winners of this European strategy?
With the announcement targeted toward the UN’s Climate Change Conference in December, BP, BG Group, Shell, Eni, Statoil and Total have openly positioned themselves as a consultative body, offering to help steer debate. Historically, the efforts of big oil & gas companies to influence the debate on climate change policy have garnered negativity, with criticism of companies working behind closed doors. However, greater transparency around how oil & gas influences the debate could work towards improving public opinion of the industry.
Carbon Pricing Framework – more stability and predictability?
The implementation of a carbon pricing framework could provide a stable and predictable framework through which to continue investing in alternative fuels, renewable and CCS technology. Investment in initiatives aimed at lowering carbon emissions has waned as a result of the recent fall in oil prices, as companies have instead looked to consolidate core assets. Through the implementation of a carbon pricing framework, however, investments in carbon reduction technology would be a safer return for energy companies than under the current regime, which would not only build an economic case for investment, but allow corporations to build a narrative around their environmental contribution.
European Six score positive points – whilst their American counterparts refuse to join
Media coverage of the announcement positively positioned European companies as progressive in contrast to their trans-Atlantic cousins, as ExxonMobil and Chevron refused to join the initiative. Although references to a “transatlantic schism” have the potential to boost a progressive narrative for European petrochemical companies, it could also work to undermine the achievability of the goals set out in the letter. With no consensus in sight between US and European companies, the aims and intentions of the European Six to steer the climate change debate could be undermined.
Impact of carbon pricing on the bottom line
There is also no denying that a carbon pricing system, aimed at increasing gas-based electricity generation, would significantly improve the bottom line of energy companies, given recent investments and acquisitions of gas assets. Although this has the potential to drive positivity within the investor community, it could ultimately be used by critics to undermine the environmental narrative around the announcement.
Perceptions positively impacted – will it last?
It is clear that the European Six’s tectonic shift towards openness and transparency has provoked deliberation. By shifting their influence from behind closed doors to open debate, it is likely the European Six will work to change perceptions around big oil & gas’s role in framing climate change policy.
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